Did you happen to notice the headlines over some comments made by China regarding their concern about American Government Debt Levels? I would have missed this one entirely amongst the general angst about our current deficit spending and concern that China might not keep buying our bonds as they have been. That is until President Obama himself felt he had to address the comments directly and essentially immediately. This reaction in itself tells me that something is wrong in Dodge, or America in this case.
When your top banker expresses concern about debt levels and you immediately jump on the comments everyone should stand up and take notice - you are desperate. I am scratching my head wondering why the markets only hiccuped and then moved on. I think China accomplished more then they could have hoped for and have clearly shown their power in the world has risen while America's tanks are running on empty.
America is not weak physically and enjoys a lot of residual goodwill around the globe as economically solid but China just showed it could bring America and the rest of the world to its knees simply by reducing or eliminating its holdings in American Government Debt. Historians will look back and determine that the balance of power has officially shifted.
Monday, March 16, 2009
Corporate Cash Balances
Over the weekend I read Jason Zweig's article on Corporate Cash Umbrellas (balances) in the Wall Street Journal several times trying to comprehend his reasoning for the article - I couldn't. Investors, especially activist shareholders as they are called, love to harangue companies and their management for items like carrying too much cash. Their has been a general distrust of companies with large cash hoards with arguments about how they don't know what to do with it so disburse it and let the shareholders decide and so on. A company didn't even have to hold a large cash balance to fall victim to these claims - leverage up, you don't use enough debt in your financial structure.
At this point in time it is easy to see the firms that leveraged up, they all have 'For Sale' or 'Going Out of Business' signs in their doors. The firms with large cash hordes don't have this problem but here Mr. Zweig is saying they have pushed the envelope too far in the opposite direction. Who is he to decide this? Does he know what the firms have planned for the future?
He names 4 companies - Exxon Mobil, Cisco, Apple and Johnson & Johnson. Exxon is involved in a capital intensive industry that is subject to wild swings as we have seen with the price of oil recently. If it were to keep cash levels low what would happen when it needed to invest in new fields or technologies at the same time that oil prices were dropping? I would like to believe that with oil prices at low levels Exxon is scouting out opportunities to acquire additional reserves which will surely rise in value given time.
Cisco is an acquisition engine, they use their cash to acquire competitors and to extend their reach. I grant that $30 or so billion is a lot of money but what if they do something earth shattering like buy a depressed stock such as HP ($70B), IBM ($124B) or more realistically EMC ($21B)?
Apple? Steve Jobs is sick so they need all the backup they can muster - or perhaps that is a great reason to pay it out now before they blow it trying to survive Steve Jobs.
Johnson & Johnson, has Mr. Zweig noticed the mergers in pharmaceuticals lately? Although I will readily admit that J&J doesn't have a great track record in acquisitions.
I find Mr. Zweig's attack on cash hard to swallow. With that said, I fully concur with his advice to actively participate in the Proxy Season. Shareholders have a responsibility to monitor their companies activities in general, cash is simply one aspect of this. American Investors are as apethetic as American Voters, perhaps more so, and both need to take a more active role in the management of thier investments and America.
At this point in time it is easy to see the firms that leveraged up, they all have 'For Sale' or 'Going Out of Business' signs in their doors. The firms with large cash hordes don't have this problem but here Mr. Zweig is saying they have pushed the envelope too far in the opposite direction. Who is he to decide this? Does he know what the firms have planned for the future?
He names 4 companies - Exxon Mobil, Cisco, Apple and Johnson & Johnson. Exxon is involved in a capital intensive industry that is subject to wild swings as we have seen with the price of oil recently. If it were to keep cash levels low what would happen when it needed to invest in new fields or technologies at the same time that oil prices were dropping? I would like to believe that with oil prices at low levels Exxon is scouting out opportunities to acquire additional reserves which will surely rise in value given time.
Cisco is an acquisition engine, they use their cash to acquire competitors and to extend their reach. I grant that $30 or so billion is a lot of money but what if they do something earth shattering like buy a depressed stock such as HP ($70B), IBM ($124B) or more realistically EMC ($21B)?
Apple? Steve Jobs is sick so they need all the backup they can muster - or perhaps that is a great reason to pay it out now before they blow it trying to survive Steve Jobs.
Johnson & Johnson, has Mr. Zweig noticed the mergers in pharmaceuticals lately? Although I will readily admit that J&J doesn't have a great track record in acquisitions.
I find Mr. Zweig's attack on cash hard to swallow. With that said, I fully concur with his advice to actively participate in the Proxy Season. Shareholders have a responsibility to monitor their companies activities in general, cash is simply one aspect of this. American Investors are as apethetic as American Voters, perhaps more so, and both need to take a more active role in the management of thier investments and America.
AIG Bonuses
Some days I have nothing to say - others I am overwhelmed. Today I will start with the brouhaha around the AIG Bonuses - Just SHUT UP!
The US Government invested in AIG, they did not send them to bankruptcy court. As such, AIG has to continue operating essentially as it always did with all its responsibilities and contracts in place. That is why we got the report yesterday showing that billions were paid out to investment banks and regular banks from the government funds, the government wanted them to honor their obligations. The US Government with all of its meddling is destroying any remaining value within AIG and jeopardizing the chance to recoup the money invested.
Shareholders appoint a Board of Directors who hires managers to run a firm, the shareholders do not stand up every day and impose another arbitrary idea on the firm.
To the great Citizens of Massachusetts, something I was formerly, please remove Barney Franks from office. He has now shown his ability to ignore the truth, his ignorance of finance and general disregard for the citizens of Massachusetts and the United States. I truly wish I were in his district to work and vote against him.
The US Government invested in AIG, they did not send them to bankruptcy court. As such, AIG has to continue operating essentially as it always did with all its responsibilities and contracts in place. That is why we got the report yesterday showing that billions were paid out to investment banks and regular banks from the government funds, the government wanted them to honor their obligations. The US Government with all of its meddling is destroying any remaining value within AIG and jeopardizing the chance to recoup the money invested.
Shareholders appoint a Board of Directors who hires managers to run a firm, the shareholders do not stand up every day and impose another arbitrary idea on the firm.
To the great Citizens of Massachusetts, something I was formerly, please remove Barney Franks from office. He has now shown his ability to ignore the truth, his ignorance of finance and general disregard for the citizens of Massachusetts and the United States. I truly wish I were in his district to work and vote against him.
Sunday, March 15, 2009
The Fall of Western Civilization
My family recently received a Costco catalog for Costco.com Spring 2009 for instant online savings. Being a regular shopper at Costco who frequently uses the coupons they send for in store usage I was interested in what they had to offer. Among the usual assortment of furniture and electronics I spotted a 'Fully Automatic Espresso Machine' which you could receive, including delivery, for ONLY $899.99 plus applicable sales tax I am sure.
As soon as I saw this item I started scratching my head, how much do you have to enjoy your espresso to pay $900 to have a maker in your own home? I reread the offering to see if there was some indication it was a commercial model for your neighborhood coffee store but they really don't give complete descriptions in the catalog so maybe this is the reasoning - maybe not.
I started looking at the catalog to see what I could 'get' for my money. How about a springfree trampoline with all the safety features for your children to play on? That is only $800 delivered. So hours of pleasure, enjoyment and supposed safety for my children is $100 less then an espresso maker. A 46" TV was $700, $200 less and clearly something I would utilize way too much. A laptop for $580 where I could run my new online business, manage my finances, read the news and twitter away hours, an elliptical machine for $1000 that could extend my life if I ever got on it and so on.
The causes of our nations economic plight are many and varied but the availability of an Espresso Maker to sit on my counter and collect dust for $900 highlights to me the extravagance and waste of our time. I have to assume Costco believes this items will sell since they aren't a speciality store with one of a kind unique items, this stuff is for the masses.
If you are considering purchasing this item please reconsider, there are families losing their homes and going hungry right down the street. Poverty and disease are endemic in many regions of the world. How much value will you get out of a $900 espresso machine (don't forget you need supplies to actually make the espresso) versus the assistance that money could provide others not as fortunate?
As soon as I saw this item I started scratching my head, how much do you have to enjoy your espresso to pay $900 to have a maker in your own home? I reread the offering to see if there was some indication it was a commercial model for your neighborhood coffee store but they really don't give complete descriptions in the catalog so maybe this is the reasoning - maybe not.
I started looking at the catalog to see what I could 'get' for my money. How about a springfree trampoline with all the safety features for your children to play on? That is only $800 delivered. So hours of pleasure, enjoyment and supposed safety for my children is $100 less then an espresso maker. A 46" TV was $700, $200 less and clearly something I would utilize way too much. A laptop for $580 where I could run my new online business, manage my finances, read the news and twitter away hours, an elliptical machine for $1000 that could extend my life if I ever got on it and so on.
The causes of our nations economic plight are many and varied but the availability of an Espresso Maker to sit on my counter and collect dust for $900 highlights to me the extravagance and waste of our time. I have to assume Costco believes this items will sell since they aren't a speciality store with one of a kind unique items, this stuff is for the masses.
If you are considering purchasing this item please reconsider, there are families losing their homes and going hungry right down the street. Poverty and disease are endemic in many regions of the world. How much value will you get out of a $900 espresso machine (don't forget you need supplies to actually make the espresso) versus the assistance that money could provide others not as fortunate?
Friday, March 13, 2009
Native Hawaiian Land Claims
Last night I read an article regarding a lawsuit by native Hawaiians making a claim along the lines that all land still owned by the State should belong to the Native Hawaiians since it was seized from them/the Kingdom of when the Kingdom was overthrown by some over zealous Americans.
The American Government apologized to the Hawaiians and they are using this apology to push their claims. Essentially the claim is that the land was theirs and it was stolen from them. This is a common claim that for centuries meant nothing, only in our self righteous do no wrong times would such a claim even exist. Ask the American Indians.
Following the logic of 'the land was mine and you took it so give it back' where would you stop. The first location that comes to mind is Isreal. The Palestinians 'owned' the land in and around Isreal for centuries prior to WW II and the creation of Isreal. Shouldn't the Palestinians have the right to claim their land from Isreal and I don't mean just the land seized during wars? If the Huns or Mongols drove you from your native lands in Asia or Europe can you sue to get them back from the current residents?
The former lands of Yugoslavia had a lot of displacement recently, Russia has moved entire groups around, perhaps they should sue in a US Court since we seem to make it a habit of extending our laws beyond our borders regularly.
Why aren't the Hawaiians simply suing to have the Kingdom restored and the US presence removed? I seem to remember there being a couple of groups who want this and based on the claims in the lawsuit it seems only logical to support them - hello 49 states. Imagine the stimulus of everyone having to buy new flags.
The American Government apologized to the Hawaiians and they are using this apology to push their claims. Essentially the claim is that the land was theirs and it was stolen from them. This is a common claim that for centuries meant nothing, only in our self righteous do no wrong times would such a claim even exist. Ask the American Indians.
Following the logic of 'the land was mine and you took it so give it back' where would you stop. The first location that comes to mind is Isreal. The Palestinians 'owned' the land in and around Isreal for centuries prior to WW II and the creation of Isreal. Shouldn't the Palestinians have the right to claim their land from Isreal and I don't mean just the land seized during wars? If the Huns or Mongols drove you from your native lands in Asia or Europe can you sue to get them back from the current residents?
The former lands of Yugoslavia had a lot of displacement recently, Russia has moved entire groups around, perhaps they should sue in a US Court since we seem to make it a habit of extending our laws beyond our borders regularly.
Why aren't the Hawaiians simply suing to have the Kingdom restored and the US presence removed? I seem to remember there being a couple of groups who want this and based on the claims in the lawsuit it seems only logical to support them - hello 49 states. Imagine the stimulus of everyone having to buy new flags.
Thursday, March 12, 2009
Term Asset Backed Loan Facility
The Term Asset Backed Loan Facility is another government program designed to get the economy rolling again. When reading the details I have to wonder if the politicians who created this program stopped to consider how the United States got into the mess it is in now.
The government will lend investors from 86 to 95% of the cost at low interest rates to purchase bonds backed by various types of consumer loans. Wasn't over leverage the initial problem that brought our economy to it's knees?
If the government is funding virtually all of the purchase price why don't they purchase the bonds themselves? Clearly such a plan must be profitable to the investors or they would not participate so once more the government is handing out tax dollars out to investment firms such as hedges funds, the crew who led us down this merry path of financial disaster.
We must also remember that this is designed to make more money available for the average consumer to borrow again. All this at a time when the average consumer is either over-leveraged and can't borrow or doesn't really want a loan.
The lenders who will benefit according to the article I read are mostly finance arms of automobile firms, didn't we already lend them billions of dollars? Isn't this a backdoor way of lending them more money without their having to succumb to the torture and micro-mismanagement of Congress being visited upon TARP recipients?
Supposedly this plan will also support the acquisition of Mortgage Backed Securities. This need leaves me a bit confused. The only mortgages being issued these days are to rock solid credit risks and a vast majority of these are for refinancing existing homes where the owners were prudent and didn't waste all their equity. Since the refinancing pays off the existing mortgage the holder of that mortgage should find themselves with excess cash needing to be invested which should naturally support the market for mortgage backed bonds. Why does the government need to provide a stimulus?
In case someone in Mr. Geithner's office reads this I want you to know that I have $100,000 sitting around to invest along with a wonderful credit score and very little debt. I would be more then happy to sign the legal paperwork and borrow $1,900,000 to invest in asset backed bonds with high ratings. If this figure is too small just let me know the minimum required and I will quickly put together a group that qualifies.
The government acting as a Prime Broker, I would have never predicted this.
The government will lend investors from 86 to 95% of the cost at low interest rates to purchase bonds backed by various types of consumer loans. Wasn't over leverage the initial problem that brought our economy to it's knees?
If the government is funding virtually all of the purchase price why don't they purchase the bonds themselves? Clearly such a plan must be profitable to the investors or they would not participate so once more the government is handing out tax dollars out to investment firms such as hedges funds, the crew who led us down this merry path of financial disaster.
We must also remember that this is designed to make more money available for the average consumer to borrow again. All this at a time when the average consumer is either over-leveraged and can't borrow or doesn't really want a loan.
The lenders who will benefit according to the article I read are mostly finance arms of automobile firms, didn't we already lend them billions of dollars? Isn't this a backdoor way of lending them more money without their having to succumb to the torture and micro-mismanagement of Congress being visited upon TARP recipients?
Supposedly this plan will also support the acquisition of Mortgage Backed Securities. This need leaves me a bit confused. The only mortgages being issued these days are to rock solid credit risks and a vast majority of these are for refinancing existing homes where the owners were prudent and didn't waste all their equity. Since the refinancing pays off the existing mortgage the holder of that mortgage should find themselves with excess cash needing to be invested which should naturally support the market for mortgage backed bonds. Why does the government need to provide a stimulus?
In case someone in Mr. Geithner's office reads this I want you to know that I have $100,000 sitting around to invest along with a wonderful credit score and very little debt. I would be more then happy to sign the legal paperwork and borrow $1,900,000 to invest in asset backed bonds with high ratings. If this figure is too small just let me know the minimum required and I will quickly put together a group that qualifies.
The government acting as a Prime Broker, I would have never predicted this.
Governments Home Relief Plan
Unless you live in a box you have heard about the Democrat's Plan to prevent the foreclosure and loss of 9 million homes in America while not assisting the speculators and those undeserving. This plan sounds just like one of those 'liar' loans that got us into this problem in the first place. Where is their documentation and evidence that they can assist 9 million homeowners?
Current homeowners either purchased homes that they can afford or didn't. If they could afford them then the most common reasons for this changing is the loss of a job or some financial difficulty usually brought on by an unexpected large expense such as health care. Neither situation can be corrected for by the Democrat's plan although these are the individuals most deserving of assistance.
If the homeowners really couldn't afford the home when they purchased it then they deserve to lose the home. Since these folks were speculators in their own way they are not supposed to be helped.
Since we have just ruled everyone who is having trouble holding on to their home as ineligible where do the politicians get off claiming they will save up to 9 million homes? Sounds like all a liar loan to me and more of the same from Washington - so much for Hope and Change.
If only I were competent with graphic software I would 'borrow' the Hope Poster and add another word stretching from the lower left corner up to the right, 'DASHED'. Of course I would give the AP photographer and the artist who created the poster credit.
Current homeowners either purchased homes that they can afford or didn't. If they could afford them then the most common reasons for this changing is the loss of a job or some financial difficulty usually brought on by an unexpected large expense such as health care. Neither situation can be corrected for by the Democrat's plan although these are the individuals most deserving of assistance.
If the homeowners really couldn't afford the home when they purchased it then they deserve to lose the home. Since these folks were speculators in their own way they are not supposed to be helped.
Since we have just ruled everyone who is having trouble holding on to their home as ineligible where do the politicians get off claiming they will save up to 9 million homes? Sounds like all a liar loan to me and more of the same from Washington - so much for Hope and Change.
If only I were competent with graphic software I would 'borrow' the Hope Poster and add another word stretching from the lower left corner up to the right, 'DASHED'. Of course I would give the AP photographer and the artist who created the poster credit.
Monday, February 23, 2009
Does Obama Know where Washington D.C. is located?
Has anyone else noticed that Pres. Obama seems to have forgotten where Washington D.C. is located? He has been everywhere but there. Funny thing about that is that when my company started having to tighten it's budgets the first thing to go was travel. Seems to me that the US is in much worse shape then my employer and yet Obama keeps on spending our money flying around the country.
Obama Foreclosure Plan
Donovan said 45 percent of home sales in December were "distressed," meaning either sellers were facing foreclosure or the homes were already seized by the bank, driving down home prices further in an already-battered market.
"We've got to make clear, here, that a foreclosure hurts every American," he told CNN.
Apparently Mr. Donovan does not consider those careful enough to avoid the housing bubble and wait for the collapse to make a reasonably priced purchase American.
I needed to move to make room for my first child in 2004. For various reasons we rented and a year later my wife started pressing to purchase. I resisted based upon the cost of houses in my area (southern California) and the obvious fact that we simply couldn't afford a home with a standard loan despite paying $2,200 a month in rent. Being from New England must make me old fashioned so an Option ARM just wasn't something I was going to use and was horrified that others would consider it for a $700,000 when they earned under $100K a year, frequently well under.
Prices in my area have finally fallen although I feel they are still high - I live in San Diego and not north in Riverside County where prices have collapsed and have no desire to live there, not sure why anyone does to be honest. If t he government is going to step in and artificially prop up values they better put something on the table for me. I am pretty sure the home buyer credit won't apply as I still own a condo that is rented, probably a disqualificaiton.
I am the middle class that everyone claims to want to help - and I feel screwed again. I can't buy a home and I have to pay for everyone else's.
Thank you Washington D.C.
While on the topic of the Housing Secretary - I happened to catch his interview on CBS News. The term News clearly did not apply to what I saw. It sure appeared that the Secretary was being lobbed questions that he and his team had prepared and presented to CBS to ask. Where is the hard hitting reporting and seriuos questions one expects from a true reporter and News show?
"We've got to make clear, here, that a foreclosure hurts every American," he told CNN.
Apparently Mr. Donovan does not consider those careful enough to avoid the housing bubble and wait for the collapse to make a reasonably priced purchase American.
I needed to move to make room for my first child in 2004. For various reasons we rented and a year later my wife started pressing to purchase. I resisted based upon the cost of houses in my area (southern California) and the obvious fact that we simply couldn't afford a home with a standard loan despite paying $2,200 a month in rent. Being from New England must make me old fashioned so an Option ARM just wasn't something I was going to use and was horrified that others would consider it for a $700,000 when they earned under $100K a year, frequently well under.
Prices in my area have finally fallen although I feel they are still high - I live in San Diego and not north in Riverside County where prices have collapsed and have no desire to live there, not sure why anyone does to be honest. If t he government is going to step in and artificially prop up values they better put something on the table for me. I am pretty sure the home buyer credit won't apply as I still own a condo that is rented, probably a disqualificaiton.
I am the middle class that everyone claims to want to help - and I feel screwed again. I can't buy a home and I have to pay for everyone else's.
Thank you Washington D.C.
While on the topic of the Housing Secretary - I happened to catch his interview on CBS News. The term News clearly did not apply to what I saw. It sure appeared that the Secretary was being lobbed questions that he and his team had prepared and presented to CBS to ask. Where is the hard hitting reporting and seriuos questions one expects from a true reporter and News show?
Wednesday, February 18, 2009
Public Employee Unions
Should unions who represent public employees be allowed to donate time, money and their support to politicians?
I don't think so. When is the last time a non-public employee got to pick and choose their boss on a regular basis? It is no wonder that our government agencies are all on the verge of bankruptcy.
I don't give much weight to the obvious argument by the unions that this tramples on their rights of free speech. The individual members are still free to do, say, contribute and vote as they desire. Since Unions can't vote I am not sure how they qualify for unlimited free speech. We have already banned priests from participating in politics or their churches could lose their tax-exempt status. Sounds pretty close to me.
Don't forget that the last time a union had the power that public employee unions wield we ended up with the Teamsters and the current U.S. Automotive Industry.
I don't think so. When is the last time a non-public employee got to pick and choose their boss on a regular basis? It is no wonder that our government agencies are all on the verge of bankruptcy.
I don't give much weight to the obvious argument by the unions that this tramples on their rights of free speech. The individual members are still free to do, say, contribute and vote as they desire. Since Unions can't vote I am not sure how they qualify for unlimited free speech. We have already banned priests from participating in politics or their churches could lose their tax-exempt status. Sounds pretty close to me.
Don't forget that the last time a union had the power that public employee unions wield we ended up with the Teamsters and the current U.S. Automotive Industry.
Wednesday, February 11, 2009
The Federal Bailout/Stimulus
What if in 1637 European governments had decided that Tulip Bulbs really weren't overpriced and supported the market?
I don't believe there is any simple, painless answer to our current turmoils. My heart goes out to the unemployed as I wonder if I will be joining them as business contracts and my employer is rumored to be working on a 3rd round of layoffs for March. It is this fear of a layoff that is gripping the country and insuring that the economic malaise will continue. I still have my income yet I have cut spending and am putting off several major purchases including a new computer and a home. Why should I deplete my savings for a down payment when I could lose my income and not have an adequate safety cushion to fall back on? The stimulus package will not address this fear.
Assuming the stimulus is approved and money starts flowing just how fast will jobs be created and saved? Assuming they send the money out for construction projects and the projects have the material required to start and the idle construction firms bring back all that they laid off do you think the workers will spend their new income? I don't. They will be shell shocked and use the money to pay off existing bills providing no stimulus. Once caught up they will save to avoid a similar fate. Where is the stimulus?
The governments plan is nothing more then a decision that Tulip Bulbs are not overpriced and they should be propped up by the government. Over the course of generations policies and procedures were put in place to handle companies that went bankrupt. Banks have their own unique rules to protect depositors. The federal government has thrown these rules out the window with a claim of protecting the financial system. Wouldn't it be better to seize failing banks no matter the size, remove the questionable assets, recapitalize the remainder and sell the now healthy institution? For small banks selling to existing banks is fine, for larger banks the government could have an IPO. They could spread the IPO work out amongst many Wall Street firms and help them while creating the new healthy bank.
The questionable assets could be held by the government for as long as it is deemed wise. This may be until maturity or when market liquidity returns and prices appear reasonable, fire sales should be avoided to maximize the return to taxpayers.
One last note - living in Southern California, that $15,000 home purchase stimulus is pretty weak and I believe that would be true in other truly hard hit real estate markets. Average homes still sell for 300 to 500K in my area so their values could easily, and I suspect will, drop by well over 15K in the next 6 to 12 months.
We had a nice ride up the economic spiral, the slide back down is proving catastrophic.
I don't believe there is any simple, painless answer to our current turmoils. My heart goes out to the unemployed as I wonder if I will be joining them as business contracts and my employer is rumored to be working on a 3rd round of layoffs for March. It is this fear of a layoff that is gripping the country and insuring that the economic malaise will continue. I still have my income yet I have cut spending and am putting off several major purchases including a new computer and a home. Why should I deplete my savings for a down payment when I could lose my income and not have an adequate safety cushion to fall back on? The stimulus package will not address this fear.
Assuming the stimulus is approved and money starts flowing just how fast will jobs be created and saved? Assuming they send the money out for construction projects and the projects have the material required to start and the idle construction firms bring back all that they laid off do you think the workers will spend their new income? I don't. They will be shell shocked and use the money to pay off existing bills providing no stimulus. Once caught up they will save to avoid a similar fate. Where is the stimulus?
The governments plan is nothing more then a decision that Tulip Bulbs are not overpriced and they should be propped up by the government. Over the course of generations policies and procedures were put in place to handle companies that went bankrupt. Banks have their own unique rules to protect depositors. The federal government has thrown these rules out the window with a claim of protecting the financial system. Wouldn't it be better to seize failing banks no matter the size, remove the questionable assets, recapitalize the remainder and sell the now healthy institution? For small banks selling to existing banks is fine, for larger banks the government could have an IPO. They could spread the IPO work out amongst many Wall Street firms and help them while creating the new healthy bank.
The questionable assets could be held by the government for as long as it is deemed wise. This may be until maturity or when market liquidity returns and prices appear reasonable, fire sales should be avoided to maximize the return to taxpayers.
One last note - living in Southern California, that $15,000 home purchase stimulus is pretty weak and I believe that would be true in other truly hard hit real estate markets. Average homes still sell for 300 to 500K in my area so their values could easily, and I suspect will, drop by well over 15K in the next 6 to 12 months.
We had a nice ride up the economic spiral, the slide back down is proving catastrophic.
Monday, January 12, 2009
Keynesian Recovery
A quote from George Bush in today's news:
"I inherited a recession, I'm ending on a recession. In the meantime, there were 52 months of uninterrupted job growth," he said.
"And I defended tax cuts when I campaigned, I helped implement tax cuts when I was president, and I will defend them after my presidency as the right course of action."
Over the last couple of days I have seen a plethora of articles about Keynes and how the plan to save the American Economy is a resurgance of Keynesian Economic Principals and Theories. I haven't read them too closely or at all in most cases but if memory serves Keynes believed that governments should deficit spend to get economies out of slowdowns.
I think Keynes is rolling over in his grave right now. Pundits who cite Keynes are looking at a very narrow picture and completely ignoring the incontrovertible facts that our government has been engaged in Keynesian spending for the past 8 years (and longer) to no long term avail. George Bush's comments assist in pointing out this fact and supporting thier failure.
The government has been deficit spending for years while driving down interest rates and implementing policies that promoted deficit spending amongst the consumers as well. This resulted in the largest financial bubble in history and the politician's solution? Blow harder into the bubble and keep it inflated, blame everyone else.
Keynes believed during Good Times the government should reduce it's spending and save for a rainy day and then increase spending during slowdowns to smooth out economic cycles. I can't remember the last time a government agency said, "Things are going good so lets save some money for when they aren't." All I have ever heard is, "Spend, Spend, Spend, we got more money? Spend IT!!!!".
The United States is actually in a Keynesian Bubble that is imploding. Failure to recognize this and accept (deal with) the consequences in order to allow our economic ship to right itself will simply lead to greater and more costly consequences down the road.
Barack Obama is not the Change we needed nor that we can Count On. He is simply perpetuating the error of Washington's ways and condemning himself to a level of historical respect equivalent to that deserved by George W. Bush.
"I inherited a recession, I'm ending on a recession. In the meantime, there were 52 months of uninterrupted job growth," he said.
"And I defended tax cuts when I campaigned, I helped implement tax cuts when I was president, and I will defend them after my presidency as the right course of action."
Over the last couple of days I have seen a plethora of articles about Keynes and how the plan to save the American Economy is a resurgance of Keynesian Economic Principals and Theories. I haven't read them too closely or at all in most cases but if memory serves Keynes believed that governments should deficit spend to get economies out of slowdowns.
I think Keynes is rolling over in his grave right now. Pundits who cite Keynes are looking at a very narrow picture and completely ignoring the incontrovertible facts that our government has been engaged in Keynesian spending for the past 8 years (and longer) to no long term avail. George Bush's comments assist in pointing out this fact and supporting thier failure.
The government has been deficit spending for years while driving down interest rates and implementing policies that promoted deficit spending amongst the consumers as well. This resulted in the largest financial bubble in history and the politician's solution? Blow harder into the bubble and keep it inflated, blame everyone else.
Keynes believed during Good Times the government should reduce it's spending and save for a rainy day and then increase spending during slowdowns to smooth out economic cycles. I can't remember the last time a government agency said, "Things are going good so lets save some money for when they aren't." All I have ever heard is, "Spend, Spend, Spend, we got more money? Spend IT!!!!".
The United States is actually in a Keynesian Bubble that is imploding. Failure to recognize this and accept (deal with) the consequences in order to allow our economic ship to right itself will simply lead to greater and more costly consequences down the road.
Barack Obama is not the Change we needed nor that we can Count On. He is simply perpetuating the error of Washington's ways and condemning himself to a level of historical respect equivalent to that deserved by George W. Bush.
Friday, January 02, 2009
Gaza Strip Bombing
When is the media going to wake up and stop pushing their left wing, soft is good agenda on the public. Listening to the media outlets be they ABC, CBS, NBC, CNN or FOX among others one is regularly being told that Innocent Civilians and Children are being killed - the world is calling upon Israel to stop it's bombing and show compassion.
What I rarely if ever hear and then in a watered down barely legible tone is that Israel civilians are being subject to missile attacks from Gaza repeatedly and have been prior to Israel's attack. These same missiles kill Innocent Civilians and Children, they just don't have as advanced guidance systems so frequently miss to the chagrin of Hamas and those launching them.
What the World needs to make clear is that terrorists of any kind by acting as they do are making themselves and EVERYONE around them subject to immediate attack and possible death. If the person living with you or next door is a terrorist then you should know that the person is a target and you are subject to death by association and proximity. If weapons are being stored next to your home/business then you should know that the site is a target and you are subject to death by association and proximity.
Terrorists can only survive if they have supporters and neighbors who fail to report on the activities going on are supporting the terrorists. Imagine if everyone knew their lives and the lives of their family were subject to imminent death based upon the actions of a neighbor. That neighbors actions would be curtailed in one form or another - either authorities would be called in when possible, neighbors would band together to drive out the problem or areas would be vacated making their uses obvious for targeting and removal.
The World is soft and terrorists know this. The government of Sudan knows that no one will interfere in Darfur so they sit in their luxury homes selling oil to willing foreign governments and companies who make a show of complaining about the slaughter going on in the countryside. If they knew that their lives and those of their families were subject to immediate termination things would change - things would have never gotten to the state they are in now.
You will never convince me that the missile strikes on Khaddafi's home in Libya several years ago didn't assist in changing his attitude towards the outside world. He suddenly understood that his actions could result in the immediate death of any and all of his family members, not to mention himself. Yet at the time of the strike all you heard in the media was how one of his young daughters died, although even that part of the story was questionable. The Terrorists sending out suicide bombers aren't doing the bombing themselves for a reason, they don't wish to die no matter what they tell the bombers.
Pirates in Somalia wouldn't be making headlines. The press runs stories how when a ship is taken hostage the local villages all open up their shops and have an economic boom. Imagine if those same villages knew the pirates were subject to immediate retaliation where ever they may be. Suddenly the pirate booty would not look so good when measured against their and their families immediate death and destruction by association.
The terrorists and criminals know that the World and authorities are soft having to appease the media and their liberal leanings. For this reason they base their activities in civilian areas just so when they get brought to justice they can scream about the death of women and children. It is time for the World to stand up and deal with terrorists appropriately and not be led to it's continued slow torture by the media. Let the news shows know that they should be reporting the NEWS and not trying to direct public opinion unless they appropriately label it an editorial in which case they can espouse anything they desire.
What I rarely if ever hear and then in a watered down barely legible tone is that Israel civilians are being subject to missile attacks from Gaza repeatedly and have been prior to Israel's attack. These same missiles kill Innocent Civilians and Children, they just don't have as advanced guidance systems so frequently miss to the chagrin of Hamas and those launching them.
What the World needs to make clear is that terrorists of any kind by acting as they do are making themselves and EVERYONE around them subject to immediate attack and possible death. If the person living with you or next door is a terrorist then you should know that the person is a target and you are subject to death by association and proximity. If weapons are being stored next to your home/business then you should know that the site is a target and you are subject to death by association and proximity.
Terrorists can only survive if they have supporters and neighbors who fail to report on the activities going on are supporting the terrorists. Imagine if everyone knew their lives and the lives of their family were subject to imminent death based upon the actions of a neighbor. That neighbors actions would be curtailed in one form or another - either authorities would be called in when possible, neighbors would band together to drive out the problem or areas would be vacated making their uses obvious for targeting and removal.
The World is soft and terrorists know this. The government of Sudan knows that no one will interfere in Darfur so they sit in their luxury homes selling oil to willing foreign governments and companies who make a show of complaining about the slaughter going on in the countryside. If they knew that their lives and those of their families were subject to immediate termination things would change - things would have never gotten to the state they are in now.
You will never convince me that the missile strikes on Khaddafi's home in Libya several years ago didn't assist in changing his attitude towards the outside world. He suddenly understood that his actions could result in the immediate death of any and all of his family members, not to mention himself. Yet at the time of the strike all you heard in the media was how one of his young daughters died, although even that part of the story was questionable. The Terrorists sending out suicide bombers aren't doing the bombing themselves for a reason, they don't wish to die no matter what they tell the bombers.
Pirates in Somalia wouldn't be making headlines. The press runs stories how when a ship is taken hostage the local villages all open up their shops and have an economic boom. Imagine if those same villages knew the pirates were subject to immediate retaliation where ever they may be. Suddenly the pirate booty would not look so good when measured against their and their families immediate death and destruction by association.
The terrorists and criminals know that the World and authorities are soft having to appease the media and their liberal leanings. For this reason they base their activities in civilian areas just so when they get brought to justice they can scream about the death of women and children. It is time for the World to stand up and deal with terrorists appropriately and not be led to it's continued slow torture by the media. Let the news shows know that they should be reporting the NEWS and not trying to direct public opinion unless they appropriately label it an editorial in which case they can espouse anything they desire.
Friday, December 05, 2008
Home Buying Stimulus - Another Outrage
I read with great joy the governments idea to force down interest rates for mortgages used to purchase a home. Being in the market for a home I can not wait to take advantage of this plan and finally get a little bit of the gold being handed out by the Good King.
Despite my personal glee and anticipation of sticking it to all my fellow taxpayers by having them subsidize my new home I can't move beyond the idea that his entire plan is insanity as only Washington D.C. can do insanity.
The problem with the housing market now was rampant speculation and loose lending standards allowing folks to get into homes they couldn't afford. Now that no one is buying the prices are falling and folks find themselves owing more then they can sell the home for.
What happens with the government plan? With lower mortgage rates the theory is that people will be able to pay up yet still afford the mortgage. This is true but completely ignores the need for these borrowers to have a downpayment. If they pay up they need more cash to complete the transaction for the downpayment and increased loan fees based on loan amount. Based on this the only folks to benefit are those already sitting on cash out of proportion to what they can afford in a monthly mortgage payment, a nice problem to have and one I doubt it prevelant.
Now let's ignore this problem with the plan and assume I purchase a home under the plan. Since I have a low interest rate I was able to pay a higher purchase price then I would have. A year goes by, the low rate plan ends, everyone who could has bought their government subsidized home and I find that I need to sell for that new job I finally got after being laid off after closing on my new home. Surprise, the value of my home has just dropped because all potential buyers are now paying the higher interest rates so they have to offer less to make their monthly payments.
Let's review - If I do what the government wants and purchase a home that I can suddenly afford due to low interest rates I am handing the seller of the home a portion of my down payment as a gift because within a short period of time the home is going to be worth less.
If I plan on staying in my new home for a long time (5 years minimum I would guess, probably 10) none of this might matter which I am sure the politicians will argue but our world and lives are flexible so what if you think you will stay and you can't?
Have I adequately expressed my disdain for politicians in general? This is a plan to artificially puff up the value of homes just like the recent home valuation bubble that burst. Get folks to take on more debt then they really should by subsidizing the interest rate and then remove the subsidy bursting the new bubble.
And let's not forget that all the money the government is throwing around eventually comes out of our pockets via taxes either directly (income) or indirectly in the cost of goods and services.
I wonder how Gov. Palin's budget is doing with the price of oil blowing the bottom out of the barrel in it's rush to be cheaper then the air we breathe.
Despite my personal glee and anticipation of sticking it to all my fellow taxpayers by having them subsidize my new home I can't move beyond the idea that his entire plan is insanity as only Washington D.C. can do insanity.
The problem with the housing market now was rampant speculation and loose lending standards allowing folks to get into homes they couldn't afford. Now that no one is buying the prices are falling and folks find themselves owing more then they can sell the home for.
What happens with the government plan? With lower mortgage rates the theory is that people will be able to pay up yet still afford the mortgage. This is true but completely ignores the need for these borrowers to have a downpayment. If they pay up they need more cash to complete the transaction for the downpayment and increased loan fees based on loan amount. Based on this the only folks to benefit are those already sitting on cash out of proportion to what they can afford in a monthly mortgage payment, a nice problem to have and one I doubt it prevelant.
Now let's ignore this problem with the plan and assume I purchase a home under the plan. Since I have a low interest rate I was able to pay a higher purchase price then I would have. A year goes by, the low rate plan ends, everyone who could has bought their government subsidized home and I find that I need to sell for that new job I finally got after being laid off after closing on my new home. Surprise, the value of my home has just dropped because all potential buyers are now paying the higher interest rates so they have to offer less to make their monthly payments.
Let's review - If I do what the government wants and purchase a home that I can suddenly afford due to low interest rates I am handing the seller of the home a portion of my down payment as a gift because within a short period of time the home is going to be worth less.
If I plan on staying in my new home for a long time (5 years minimum I would guess, probably 10) none of this might matter which I am sure the politicians will argue but our world and lives are flexible so what if you think you will stay and you can't?
Have I adequately expressed my disdain for politicians in general? This is a plan to artificially puff up the value of homes just like the recent home valuation bubble that burst. Get folks to take on more debt then they really should by subsidizing the interest rate and then remove the subsidy bursting the new bubble.
And let's not forget that all the money the government is throwing around eventually comes out of our pockets via taxes either directly (income) or indirectly in the cost of goods and services.
I wonder how Gov. Palin's budget is doing with the price of oil blowing the bottom out of the barrel in it's rush to be cheaper then the air we breathe.
Tuesday, November 25, 2008
Govt Response to Crisis
How many of you are watching the US Govt spread money around the economy and wondering where this money is coming from? Then you realize it is coming from our pockets. Governments do not generate revenue, they tax their citizens.
Although I laud the attempts to prevent a complete financial meltdown in the end the taxpayers are going to pay for all this generosity. The problem I have with the recent attempts to 'fix' things is that the government thinks lending is the answer. How short sighted - that is what got us in this mess and the majority of folks who want to borrow money are the ones who can't pay it back now. How will lending them more money help?
I am also irritated with the mortgage alteration plans - I have a mortgage, it is small and paid on time but the rate is a bit higher then market rates today. When do I get my rate lowered?
Although I laud the attempts to prevent a complete financial meltdown in the end the taxpayers are going to pay for all this generosity. The problem I have with the recent attempts to 'fix' things is that the government thinks lending is the answer. How short sighted - that is what got us in this mess and the majority of folks who want to borrow money are the ones who can't pay it back now. How will lending them more money help?
I am also irritated with the mortgage alteration plans - I have a mortgage, it is small and paid on time but the rate is a bit higher then market rates today. When do I get my rate lowered?
US Tax Code Change - Interest Deductions
What I have been thinking about a lot in recent years and something that has taken a more cohesive form while watching the credit crisis unfold is how the tax system is used to subsidize the wealthy at the expense of the poor. More specifically, by giving deductions for mortgage interest the government is subsidizing the cost of owning a home to the detriment of those who don’t own a home. It is arguable that most families and individuals who don’t own homes can’t afford them thus those who can afford a home are being subsidized by those who can’t.
I believe that eliminating the mortgage interest deduction would be a bridge to far. A more tempered approach would be to allow the deduction for the original mortgage used to purchase a home but not for home equity lines, 2nd mortgages or refinancing. A cap on the maximum size of the loan should also be considered. I can already here the financial firms calling their lobbyists. This change would need to be phased in so that existing loans would be grandfathered or more families could find themselves in financial difficulty then already do. As a supported of this change I can’t wait to trot out sound bites such as, “Why should taxpayers be paying for someone’s Jet Ski”.
An even bigger change I suggest is to change the deductibility of interest payments for a corporation. If a company takes out a loan to finance expansion or normal operations the interest would be deductible as a cost of doing business. If debt is taken out to acquire a firm or to leverage up the balance sheet to distribute funds to shareholders then the interest should not be deductible. This law should be passed with generic intent language with the caveat that if a loan is questionable in its classification then it isn’t tax deductible.
Investment Banks, Hedge funds and buyout firms that are still in business have now redoubled their efforts to reach their lobbyists and probably started hiring a few more.
The benefits of this change are similar in nature to changing the mortgage deduction yet support within the electorate should be overwhelming. Why should individuals or firms be allowed to purchase companies employing hard-working Americans by loading them up with questionable levels of debt and then laying of workers to pay for it. Then as an additional slap in the face they drastically reduce their corporate taxes due to the interest on this debt. Currently the Anhueser Busch acquisition is a wonderful example although it does lack the LBO firm involvement. Various news services have speculated that part of the financial justification for the acquisition by InBev is the ability to pile debt onto the US firm and drastically reduce it’s annual tax bill to the tune of $800 million by some estimates.
Throw in a few examples of the LBO Chiefs accumulating personal wealth in the billions of dollars and state that it came out of the hide of the taxpayer and politicians wouldn’t be able to support the change fast enough.
I am sure that the impact of these changes would be widespread and that I have not considered a large number of them. In the short term it couldlead to a slow down in growth but given the current situation the impact might be fairly minimal. I would argue that much of our past growth wasn’t natural and only occurred as a result of debt juicing the system to the point where we are now so it is a cost we much bear.
I would see this change reducing the leverage of most companies providing for the cushion they require when times get tough like they are now. Many want to blame Wall Street and the Bankers for getting us into our current predicament, especially the politicians, I believe the government is largely to blame, their scapegoats simply used the system put in place by the politicians as any rational human being will try to do. If I had the ability to borrow a few billion dollars and take a firm private and then borrow even more to give myself a large dividend reducing my risk to zero I would do it in a heartbeat. I believe that option should still be available, I just don’t believe the US Taxpayer should be shouldering the cost as they do today.
I believe that eliminating the mortgage interest deduction would be a bridge to far. A more tempered approach would be to allow the deduction for the original mortgage used to purchase a home but not for home equity lines, 2nd mortgages or refinancing. A cap on the maximum size of the loan should also be considered. I can already here the financial firms calling their lobbyists. This change would need to be phased in so that existing loans would be grandfathered or more families could find themselves in financial difficulty then already do. As a supported of this change I can’t wait to trot out sound bites such as, “Why should taxpayers be paying for someone’s Jet Ski”.
An even bigger change I suggest is to change the deductibility of interest payments for a corporation. If a company takes out a loan to finance expansion or normal operations the interest would be deductible as a cost of doing business. If debt is taken out to acquire a firm or to leverage up the balance sheet to distribute funds to shareholders then the interest should not be deductible. This law should be passed with generic intent language with the caveat that if a loan is questionable in its classification then it isn’t tax deductible.
Investment Banks, Hedge funds and buyout firms that are still in business have now redoubled their efforts to reach their lobbyists and probably started hiring a few more.
The benefits of this change are similar in nature to changing the mortgage deduction yet support within the electorate should be overwhelming. Why should individuals or firms be allowed to purchase companies employing hard-working Americans by loading them up with questionable levels of debt and then laying of workers to pay for it. Then as an additional slap in the face they drastically reduce their corporate taxes due to the interest on this debt. Currently the Anhueser Busch acquisition is a wonderful example although it does lack the LBO firm involvement. Various news services have speculated that part of the financial justification for the acquisition by InBev is the ability to pile debt onto the US firm and drastically reduce it’s annual tax bill to the tune of $800 million by some estimates.
Throw in a few examples of the LBO Chiefs accumulating personal wealth in the billions of dollars and state that it came out of the hide of the taxpayer and politicians wouldn’t be able to support the change fast enough.
I am sure that the impact of these changes would be widespread and that I have not considered a large number of them. In the short term it couldlead to a slow down in growth but given the current situation the impact might be fairly minimal. I would argue that much of our past growth wasn’t natural and only occurred as a result of debt juicing the system to the point where we are now so it is a cost we much bear.
I would see this change reducing the leverage of most companies providing for the cushion they require when times get tough like they are now. Many want to blame Wall Street and the Bankers for getting us into our current predicament, especially the politicians, I believe the government is largely to blame, their scapegoats simply used the system put in place by the politicians as any rational human being will try to do. If I had the ability to borrow a few billion dollars and take a firm private and then borrow even more to give myself a large dividend reducing my risk to zero I would do it in a heartbeat. I believe that option should still be available, I just don’t believe the US Taxpayer should be shouldering the cost as they do today.
The World Economic Disaster - US Auto Industry
Imagine my surprise to see the WSJ publish editorials stating that the US Auto Manufacturers were bankrupt and should admit it. I have been stating that idea for a long time now while receiving indifference at best in return.
Fortunately the US Congress has recognized that simply throwing money at them is not the answer and has asked for a plan to show how additional investments will be used to return the firms to profitability. Since this is not possible it will be interesting to see what the politocos do next.
I have stated that Unions have a valuable place in our economy but like most other establishments they can exceed their usefulness and value. Auto workers unions have done this in conjunction with weak management and weaker politicians. The Unions last reduction in benefits is laughable and the entire auto industry needs to be rebuilt from the ground up which can only occur via bankruptcy.
Fortunately the US Congress has recognized that simply throwing money at them is not the answer and has asked for a plan to show how additional investments will be used to return the firms to profitability. Since this is not possible it will be interesting to see what the politocos do next.
I have stated that Unions have a valuable place in our economy but like most other establishments they can exceed their usefulness and value. Auto workers unions have done this in conjunction with weak management and weaker politicians. The Unions last reduction in benefits is laughable and the entire auto industry needs to be rebuilt from the ground up which can only occur via bankruptcy.
Thursday, April 12, 2007
Pollution and Packaging
There should be a tax on consumer packaging.
I don't know the specifics but my young daughter likes to get dolls and what not (way too many which is a whole different issue). The process of unpacking a doll is a science that all parents have to learn to master. So that the item stays displayed properly in the box with a clear plastic front for proper viewing and child enticements every component of the toy is attached to the back of the box.
The body is strapped on, the arms and legs are positioned in a welcoming manner and strapped down. The hair is spread out and stitched to the back. Accoutrements
I don't know the specifics but my young daughter likes to get dolls and what not (way too many which is a whole different issue). The process of unpacking a doll is a science that all parents have to learn to master. So that the item stays displayed properly in the box with a clear plastic front for proper viewing and child enticements every component of the toy is attached to the back of the box.
The body is strapped on, the arms and legs are positioned in a welcoming manner and strapped down. The hair is spread out and stitched to the back. Accoutrements
such as shoes, dresses, hair brushes, etc are all laid out for visual inspection and attached as well. To unpackage this item one has to undo twisty ties, cut tiny lines and extract the product from these bounds. In order to improve the image you may find small plastic tabs that the ties are fed through designed to keep the ties spread open instead of pulling tight as well reduce possible tearing of the cardboard box. Metal ties do not remove easily as they holes they are fed through are just right for the straight ties to be inserted into - post twisting they are anything but straight and are amazingly resistent to straightening.
Once you fight through all of this and have removed the product you are left with an amazing amount of packaging and associated materials which must be disposed of. Perhaps the tax should be in direct proportion to the volume of the product versus the volume of the packaging material. Milk cartons are fairly efficient, there isn't a lot of wasted material there so the tax would be low to non-existent. Bratz and other dolls should be charged $10/package.
Carbon Dioxide
Now that I am back why should I stop with foolish borrowers and lenders?
Many people believe that Global Warming is an issue and most believe it is being caused by Carbon Dioxide. I tend to believe and think that even if CO2 isn't causing global warming it sure isn't doing us any good. Like many others I don't personally want to have to suffer to reduce CO2 emmissions even though that is unrealistic so here are a few suggestions:
Ban any and all additional car registrations beyond those already on the books. If you want a new car you have to remove an old one from the rolls to make room for your new one. Sure this will further bury the car companies but they have made their fortunes by polluting the world and we will all have to give up something to make this work.
Emissions controls should be tightened at the same time.
How long would it take someone to come up with a CO2 free car after that law goes into effect? Electric Cars don't really count, that electricity requires power plants who produce CO2 as well so they don't slip by.
New power plants that produce CO2 should be banned along the same lines. You dismantle one you can build a new one that can produce up to some % of the old plant. If you can produce more electricity with 80% less emmissions then go right ahead.
The US can't influence other countries to improve their situations unless we share in the pain.
Many people believe that Global Warming is an issue and most believe it is being caused by Carbon Dioxide. I tend to believe and think that even if CO2 isn't causing global warming it sure isn't doing us any good. Like many others I don't personally want to have to suffer to reduce CO2 emmissions even though that is unrealistic so here are a few suggestions:
Ban any and all additional car registrations beyond those already on the books. If you want a new car you have to remove an old one from the rolls to make room for your new one. Sure this will further bury the car companies but they have made their fortunes by polluting the world and we will all have to give up something to make this work.
Emissions controls should be tightened at the same time.
How long would it take someone to come up with a CO2 free car after that law goes into effect? Electric Cars don't really count, that electricity requires power plants who produce CO2 as well so they don't slip by.
New power plants that produce CO2 should be banned along the same lines. You dismantle one you can build a new one that can produce up to some % of the old plant. If you can produce more electricity with 80% less emmissions then go right ahead.
The US can't influence other countries to improve their situations unless we share in the pain.
Mortgage Crisis?!
I have been quiet for a long time but the 'Mortgage Crisis' has finally prompted me to emerge.
The latest article I read was on Marketwatch.com today and went into great detail about how millions of families are on the verge of losing their homes because of the strict bankruptcy laws and how the laws should be relaxed to assist these poor folk.
Screw the poor folk (meaning ones approaching bankruptcy, not folks who generally don't have a lot of money) and I would prefer to express myself with much stronger language. There are some who end up in financial straights by no design of their own via means such as illness or unexpected job losses, I have no problem trying to assist this class of bankruptcies if someone could figure out how to neatly identify them.
The fools who took out the sub-prime mortgages with variable rates or interest only payments and every other variation designed to lower their payments so they could buy ever bigger houses and continue driving housing prices higher should lose everything. I don't feel they deserve any pity. If they deserve pity then I was a fool for not going whole hog and borrowing obscene amounts of money beyond what I could ever be forecast to afford just so the government could step in let me keep my oversized home and forgive a significant chunk of my mortgage so I can start making payments that I can truly afford.
The mortgage companies and those who borrowed from them should be made to pay the price for their decisions and actions. If anyone thinks the banks and mortgage companies are in it to help the borrower they are the fool - the lenders are in it to make money. For the past several years they just cared about approving more and more loans to generate the origination fees and income. Rising home values, fueled by their lending abandon, masked the issues as they would simply refinance at ever higher levels or the home would be sold and cover the debt with a profit for the borrower.
I look forward to millions of Americans losing their homes and declaring bankruptcy. I want to see housing prices fall dramatically (I live on the West Coast so a $500K house is a hovel) so that I can pull out my stellar credit record and buy a reasonable house at a reasonable price. A nice recession would put some reality back into peoples outlooks.
The latest article I read was on Marketwatch.com today and went into great detail about how millions of families are on the verge of losing their homes because of the strict bankruptcy laws and how the laws should be relaxed to assist these poor folk.
Screw the poor folk (meaning ones approaching bankruptcy, not folks who generally don't have a lot of money) and I would prefer to express myself with much stronger language. There are some who end up in financial straights by no design of their own via means such as illness or unexpected job losses, I have no problem trying to assist this class of bankruptcies if someone could figure out how to neatly identify them.
The fools who took out the sub-prime mortgages with variable rates or interest only payments and every other variation designed to lower their payments so they could buy ever bigger houses and continue driving housing prices higher should lose everything. I don't feel they deserve any pity. If they deserve pity then I was a fool for not going whole hog and borrowing obscene amounts of money beyond what I could ever be forecast to afford just so the government could step in let me keep my oversized home and forgive a significant chunk of my mortgage so I can start making payments that I can truly afford.
The mortgage companies and those who borrowed from them should be made to pay the price for their decisions and actions. If anyone thinks the banks and mortgage companies are in it to help the borrower they are the fool - the lenders are in it to make money. For the past several years they just cared about approving more and more loans to generate the origination fees and income. Rising home values, fueled by their lending abandon, masked the issues as they would simply refinance at ever higher levels or the home would be sold and cover the debt with a profit for the borrower.
I look forward to millions of Americans losing their homes and declaring bankruptcy. I want to see housing prices fall dramatically (I live on the West Coast so a $500K house is a hovel) so that I can pull out my stellar credit record and buy a reasonable house at a reasonable price. A nice recession would put some reality back into peoples outlooks.
Subscribe to:
Posts (Atom)
Posts
